The pain never ends at Royal Bank of Scotland. The bank, still 81%-owned by the UK government, said late Monday it would take more than £3 billion of extra provisions for various legal issues and past misconduct claims.

That puts RBS on course for a huge loss in the last quarter of 2013. The bank had already said it would take an impairment charge of £4 billion to £4.5 billion as result of its plan to set up an internal "bad bank" to deal with problem assets left over from the financial crisis.

Sure, RBS may have made some operating profit in the fourth quarter. But this tsunami of provisions will overwhelm any positive news. The bank's shares fell Monday in response; eight of its top executives have been denied a bonus for 2013.

Those suspecting new chief executive Ross McEwan is trying to kitchen-sink bad news may find there is more to come. Of the newly announced provisions, £1.9 billion is for litigation relating to mortgage-backed securities sold before the financial crisis. RBS has made a new estimate of that cost following JP Morgan recent settlements, but the final tab is unclear.

The bank has also added £1 billion to its provisions for past misselling of payment-protection insurance and interest-rate swaps. But those provisions still only represent RBS's current best estimate of the final cost.

A major worry is how this will affect RBS's capital. The bank now expects its core Tier 1 equity ratio to be between 8.1% and 8.5% at the end of 2013, down from 9.1% at the end of September. RBS still hopes to raise that ratio to 11% by the end of 2015, and to 12% by the end of 2016. Its optimism is based on plans to float its US subsidiary Citizens and to accelerate disposal of its highly risky legacy assets.

But as long as RBS remains every lawyer's favorite UK bank, there can be no certainty around any of its forecasts. And any hope that the government's stake in RBS can soon be sold back to the private sector has surely been dashed once more. Trading at just 0.33 times book value, RBS is cheap relative to European peers.